Competition is essential for growth, but only when a company correctly evaluates its competitors and improves itself to keep up. Even in the field of marketing, analyzing competition is healthy and can help motivate you to learn and adjust your business to better meet consumer needs.
Part of the way is to understand direct and indirect competition and how each type of competition affects your work. Once you understand the differences, you can determine how to best identify and evaluate your competitors-both direct and indirect.
What is direct competition?
When you think of marketing competitors, you might think of your direct competitors. Direct competitors are other companies that provide the same services to the same customer needs in the same market as you.
So, suppose your marketing company mainly works with restaurants in the western United States. Of course there are other companies that specialize in restaurant marketing in the western United States, and these companies will be your direct competitors.
Even the smallest market will have direct competition, which is important to prevent monopoly.
Examples of direct competition
There are many examples of direct competition. McDonald’s, Wendy and Burger King are all direct competitors. Similarly, consider the infamous fast-food chicken sandwich battle, when major restaurant chains such as Popeyes, KFC, Wendy’s, Zaxby’s, etc. all launched chicken sandwiches to attract the same consumer groups across the United States.
Competition is not just for large, domestic or international brands. Two women’s fashion boutiques in rural towns are also direct competitors.
Digital companies also face direct competition. For example, Instagram and Snapchat provide very similar features for their target audiences, such as disappearing stories and direct messaging.
What is indirect competition?
Indirect competition means that two or more companies in the same market address the same customer needs, but provide different products and services. Although the products and services of indirect competition are different, they can still meet the needs of customers.
Examples of indirect competition
Suppose we have a customer base in a small town. Customers are very hungry and often drag their main force to dinner. Here, there are four main restaurants-all restaurants offer different types of food. Although they offer different products, the purpose of the restaurant is the same: to provide food to hungry customers in the town.
Similarly, consider a customer who needs to buy gifts for a birthday party. A shop sells clothes. A shop across the street sells jewelry. Although the products are different, both stores are competing for the same customer.
Direct and indirect competition in marketing
In terms of marketing, understanding your direct and indirect competition can help you improve your marketing activities and even attract new audiences.
The chicken sandwich battle mentioned earlier is a good example. Popeyes launched its highly respected fried chicken sandwich through a strong marketing campaign. Direct competitors—other fast food restaurants that sell chicken sandwiches—can use marketing to showcase their own entries in the so-called competition.
result? In the past few years, the main media has covered a lot of chicken sandwich wars. Customers line up in groups at various fast food restaurants to try the latest and reputedly best chicken sandwiches.
On the other hand, analyzing your indirect competition can help marketers attract a wider audience. If you know that the person buying the gift is choosing between your store and a similar store offering different products, you can create an event to attract these customers. In terms of numbers, indirect competitors may target the same keywords and understand that this can help improve SEO and get your business to the top of the search engine results page (SERP).
How to identify your competitors
- Customer feedback
- market survey
- social media
- Keyword research (indirect)
- View SERP
1. Customer Feedback
A quick way to identify competitors is to ask your current customers or potential customers. For example, if your potential customers have questions about your products or services, please ask some other businesses they are considering buying. Send a feedback questionnaire to ask customers what other brands they are considering and why they chose your brand.
2. Market Research
This requires you to do some digging. If you have a physical store, you need to check similar stores, their websites, and social media to better understand their business. Customer surveys can also be classified as market research.
3. Social media
Many people share their buying experiences on social media and forum sites such as Reddit. Check out the suggestions people have shared for the products or services you sell to help identify the top competitors in your market.
4. Keyword research
For indirect competitors, please turn to keyword research. You can use the keywords you target to identify other companies that target the same keywords, and ultimately occupy the same top position in the SERP and the same audience.
5. View SERP
Speaking of SERP, it can also be a convenient tool for identifying competitors. Search for your keywords to find out which companies rank high on these keywords to see your indirect competitors.
Track and analyze competitors
Now you know the difference between direct and indirect competitors, and you have narrowed down the list of both related to your business. What’s next?
Now is the time for a competitive analysis, which will help you improve your business strategy when comparing with your competitors.
Have Several items included in the competitive analysis: Direct and indirect competitors, products/services sold, competitors’ sales strategies, pricing and sales, marketing and content strategies, as well as social media and websites.
These comprehensive data will enable you to better understand your competitors’ operations at all levels, from the products they sell to their customer service, all online and offline.
Researching competitors, products, services, keywords and marketing strategies together requires a large amount of data to be classified and organized, so HubSpot’s competitive analysis template These tasks can be completed easily.
There are many different templates to consider when creating a visual competitive analysis, so find the one that best suits your needs. You may find it useful to use multiple for different comparisons.
Use direct and indirect competitive analysis to benefit you
A little healthy competition will never hurt anyone, but you must know how to play the game. By identifying and analyzing your competitors, you can gain a place in the competition by improving your marketing strategy, focusing on your target audience, and reaching potential new customers.